EMA raising ignores nuclear tie-up

The West Australian

Thursday, 16 July 2009 5:21PM

Energy and Minerals Australia, the owner of one of WA's biggest uranium deposits, has ignored the lure of a tie-up with a nuclear industry player and instead tapped financial investors to raise $12.2 million.

Unlike several of its peers which have struck early-stage deals with nuclear power generators or uranium miners, EMA chief executive Chris Davis said yesterday it had "specifically gone down the institutional investor route which leaves us unaligned".

The raising, which is needed to fund EMA's $10 million 12-month exploration program at the flagship Mulga Rock uranium project north-east of Kalgoorlie-Boulder, will also see controlling shareholder Mike Fewster diluted to provide more stock liquidity.

Mr Fewster controls an 85.3 per cent block which will be cut to about 71 per cent at the completion of the capital raising.

The three-tranche capital raising requires EMA shareholder approval, likely at a meeting towards the end of next month. Mr Fewster has flagged his intention to support the capital raising.

In addition to a $9.2 million two-tranche placement to clients of Austock Corporate Finance, existing shareholders will be asked to pick up a further $3 million in stock at the same price of 21¢ each. Every new share will be accompanied by a free option, with a 33¢ strike price, which could raise another $19.1 million for EMA if exercised and further dilute Mr Fewster's stake.

EMA has struggled to gain much sharemarket traction because of its low share liquidity.

EMA shares came out of a trading halt yesterday to ease 0.5¢ to 27.5¢, valuing the junior at $80 million.

Mulga Rock sits on 54.1 million pounds of uranium oxide using a 550 parts per million cut-off, or 24.1 million pounds at a high-graded 1060ppm. It is about twice the size of Mega Uranium's Lake Maitland and Toro Energy's Wiluna projects and lags only Cameco Corp's Kintyre and BHP Billiton's Yeelirrie in terms of estimated resource base.

Analysts said that although EMA had so far avoided striking a deal with a uranium industry player, it was likely to have to eventually succumb if it wanted to get a project of Mulga Rock's size into timely development.